By Geoffrey Smith
Investing.com -- The Senate reconvenes and may or may not vote on increasing the direct payments in the recent stimulus bill to $2,000 from $600. The House of Representatives passed the motion on Monday. U.S. stocks are set to build on yesterday’s record highs, and U.K. stocks roar ahead as London reopens for the first time since the Brexit deal was struck. The API releases U.S. oil inventory data later. Here’s what you need to know in financial markets on Tuesday, December 29th.
1. Senate returns amid stimulus check speculation
The U.S. Senate is set to reconvene, a day after the House of Representatives approved a motion to raise the direct payments to households provided for by the $900 billion stimulus bill from $600 to $2,000.
The Senate so far hasn’t scheduled a vote on the issue, but Senator Bernie Sanders has threatened to filibuster a separate motion overriding President Trump’s veto of the recent defense spending bill unless a vote on higher stimulus checks is also timetabled.
Some Senate Republicans have expressed support for increasing the payments, fearful that refusing to do so could cost the party the runoff elections in Georgia on January 5th. Those votes will determine control of the Senate for the next two years.
2. Nikkei hits 30-year high, Kosdaq at all-time high as China tech gets the jitters
Japanese stocks hit a 30-year high and South Korea’s tech index KOSDAQ hit a new record high, largely in response to the move in U.S. stocks on Monday.
However, there were also signs of money rotating out of Chinese tech stocks that followed the latest regulatory moves against Ant Group. The Hang Seng Tech index had fallen 4.3% on Monday on fears that the crackdown on the empire of Alibaba (NYSE:BABA) founder Jack Ma could also have spillovers into the rest of a sector that was among the world’s hottest in 2020.
Bloomberg reported earlier that Ant Group is looking at establishing a holding company that would be regulated like a bank, a move that would signal a major retreat after years of exploiting loopholes in Chinese law to grow some of the country’s biggest wealth management and insurance businesses.
3. U.S. stocks set to open at new highs
U.S. stocks are set to open at new record highs, as thin volume amplifies the effect of news flow that is encouraging speculation on increased fiscal stimulus.
By 6:15 AM ET (1115 GMT), Dow Jones futures were up 140 points, or 0.5%, while the S&P 500 futures contract and the Nasdaq futures contract were both up 0.4%. All three cash indices had posted new record highs on Monday.
The yield on the 10-Year Treasury bond was stable at 0.94%, while the dollar index, which tracks the greenback against a basket of advanced economy currencies, fell 0.4% to 89.963, again testing the 32-month low that it hit earlier in December.
4 U.K. stocks surge on Brexit deal; AstraZeneca/Oxford vaccine may be approved later
U.K. stocks roared higher as the London market reopened for the first time since the U.K. and EU agreed their free trade deal just before the Christmas holiday.
By 6:15 AM ET, the FTSE 100 and midcap FTSE 250 indices were both up by more than 2%, while the pound also gained on signs of foreign investors starting to rebalance a position that has been underweight for over four years.
Adding to the positive sentiment were reports that U.K. health regulators may approve the Covid-19 vaccine developed by AstraZeneca (NASDAQ:AZN) and Oxford University as early as today. The approval would come at a time when the virus is spreading faster than ever in the U.K., prompting speculation in local media that the government will have to craft a new and even tighter level of lockdown measures to bring it under control.
5. Oil rises ahead of API data
Crude oil prices regained some momentum against the backdrop of data from the Commodity Futures Trading Commission showing a broad increase in speculative long positions in commodities, both agricultural and industrial.
By 6:30 AM ET, U.S. crude futures were up 1.3% at $48.22 a barrel, while the international benchmark Brent was up 1.3% at $51.55 a barrel.
The level of net speculative long positions in crude rose last week to its highest since August, at nearly 526,000 contracts.
The American Petroleum Institute will release its weekly estimate of oil inventories at 4:30 PM ET as usual.